Small Business, Big World

http://www.forbes.com/
Dan Brutto

International clients can keep your company buoyant in tough times.

As the nation focuses on healing Wall Street, it's critical that we don't overlook Main Street. American small businesses, which employ half of the nation's workers, have the innovation and entrepreneurial spirit to drive our economic recovery--if we give them the tools they need to succeed.

And opening the doors to global trade is one of the best, but least talked about, ways of fostering small-business growth.

While this may seem counterintuitive as the stimulus bill's "Buy American" provisions dominate headlines, international trade can help small businesses stay strong in tough times by helping them diversify and by shielding them against the risk of being dependent on one market.

Access to global markets can move a new business from a backyard garage to a local warehouse to a global network. In fact, small businesses that export are 20% more productive and have 20% greater job growth than non-exporters, and they are 9% more likely to stay financially solvent.

The opportunities from global trade also can help fuel the entrepreneurial spirit we need right now. In a recent nationwide UPS survey of small businesses, 91% of small-business owners said that in one year, they expect their company to be in the same or better financial shape than it is today.

But of the respondents, small-business owners who engage in international trade were even more likely to project that their business would be in a better economic position 12 months from now. So keeping these economic engines humming by facilitating trade in today's tough times is critical.

To open trade doors for small business, the first thing we must do is prevent a potentially costly mistake: the resurgence of protectionism. Protectionism did not help the U.S. climb out of the Great Depression. In fact, in the wake of protectionist laws, world trade declined by 66% between 1929 and 1934.

In contrast, the World Trade Organization estimates that cutting trade barriers across agriculture, manufacturing and services by one-third would add $613 billion to the world economy. In the U.S., trade supports millions of American jobs. In fact, according to the U.S. Treasury Department, as many as 57 million Americans now work for companies engaged in global commerce.

At a time of economic uncertainty, America's exports are growing and helping the U.S. economy, not hurting it. Small businesses sold nearly $263 billion in known exports in 2006 (the latest data available)--that's up 68.7% from 1996. Clearly, entrepreneurs are recognizing the benefits of trade, and we should do what we can to help them harness the power of trade to grow their businesses.

To be sure, while trade has clear benefits, it also presents challenges, from learning about new markets to complying with complex customs regulations. Fortunately, there already is in place a network of resources available to help small businesses through the Small Business Administration and the U.S. Commercial Services, which have numerous export centers nationwide.

At a time when funding government programs is under the microscope, we must make sure that these organizations have the resources they need so they can help small businesses trade. In today's market, access to financing is critical. Expanding beyond borders requires an initial capital investment--something that's not easy for many small-business owners.

The U.S. Export-Import Bank and the Small Business Administration can help small businesses finance their global expansions in a manageable way. As credit markets tighten, legislators and the business community must do what they can to make sure these organizations keep credit open to help small businesses succeed.

As we work toward economic recovery, the most important thing for small businesses to know is that trade offers opportunities even during these difficult times, and there are resources that can help them expand to new markets.

But it is up to lawmakers, trade associations and the business community at large to empower small businesses with the tools they need to succeed on the world stage--which, in turn, will help preserve the optimistic, entrepreneurial spirit we need for economic recovery.

Dan Brutto is president of UPS International.